Third Circuit provides Guidance on Joint Employment for FLSA

Dual-employment is a serious concern for some employers. Joint-employment issues may arise when individuals work among parent corporations, subsidiaries and affiliates, or when employers hire independent contractors to perform services.

The Third Circuit Court of Appeals recently established a new test for determining the “employer” under the Fair Labor Standards Act to determine when two employers each employ the same employee. The test set forth in In Re Enterprise Rent-A-Car provides that the following factors should be reviewed to determine if a joint employment relationship exists:

• The authority to hire and fire;
• The authority to make work rules and assignments and set conditions of employment (such as compensation, benefits and work schedules);
• The actual control of employee records (such as payroll, insurance or taxes).

The court advised that the factor is not the only determination; instead, other indicia of control may also be considered to determine if a joint employment relationship exists for purposes of the Fair Labor Standards Act.